The equitable doctrine of marshalling is a relatively opaque and infrequently utilised area of law but is something all property and banking lawyers should be aware of. In its most basic form, it is designed to produce a just and equitable result between two secured creditors who are owed different debts by the same creditor but secured by unequal security interests. The doctrine was explained by Lord Neuberger in Szepietowski v NCA [2014] 1 AC 338 in this way:
“The doctrine of marshalling applies where there are two creditors of the same debtor, each owed a different debt, one creditor (A) having two or more securities for the debt due to him and the other (B) having only one. B has the right to have the two securities marshalled so that both he and A are paid so far as possible. Thus if a debtor has two estates (Blackacre and Whiteacre) and mortgages both to A and afterwards mortgages Whiteacre only to B, B can have the two mortgages marshalled so that Blackacre can be made available to him if A chooses to enforce his security against Whiteacre. For the doctrine to apply there must be two debts owed by the same debtor to two different creditors.”
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